Nationalization as Credible Threat Against Tacit Collusion

Quaderni - Working Paper DSE N° 972

19 Pages Posted: 23 Oct 2014

See all articles by Flavio Delbono

Flavio Delbono

University of Bologna - School of Economics, Management, and Statistics

Luca Lambertini

University of Bologna - Department of Economics

Date Written: October 23, 2014

Abstract

Within a simple model of differentiated oligopoly, we show that tacit collusion may be prevented by the threat of nationalising a private firm coupled with the appropriate choice of the weight given to private profits in the maximand of the nationalised company. We characterise the properties of such a threat and prove that it may allow to credibly deter tacit collusion.

Keywords: tacit collusion, nationalization, mixed oligopoly

JEL Classification: H13, L13, L32

Suggested Citation

Delbono, Flavio and Lambertini, Luca, Nationalization as Credible Threat Against Tacit Collusion (October 23, 2014). Quaderni - Working Paper DSE N° 972. Available at SSRN: https://ssrn.com/abstract=2513702 or http://dx.doi.org/10.2139/ssrn.2513702

Flavio Delbono (Contact Author)

University of Bologna - School of Economics, Management, and Statistics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Luca Lambertini

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

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